Earnings Call: Q4 2020

Feb 26, 2021

Good morning. Welcome to Minerva's Conference Call, the result of the Q4 2020. Today, with us, we have Mr. Fernando Callejiqueros, Chief Executive Officer and Edison Tico, CFO and Investor Relations Officer, we wish to inform you that this event is being recorded and all participants will be on listen mode During the company's presentation next, we're going to start the Q and A session for analysts and investors when further instructions will be provided. Rated by dialing star 0. The slides of this presentation are being available through a live webcast at www.minevrefus.com/ir. In this address, you can find the presentation for download at the webcast platform in the Investor Relations section. Before proceeding, we wish to mention that forward looking statements may be made during this presentation relating to Minerva's business prospects, operating and financial estimates and goals. They are based on beliefs and assumptions of the company's management as well as on information currently available. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Investors should understand that general economic conditions and industry conditions and other operating factors could also affect the future results of Minerva and could cause results to differ materially from those expressed in such forward looking statements. We would now like to give the floor to Mr. Fernand Keras, CEO, who is going to begin the presentation. Please, Mr. Quiroz, you may start the presentation. Good morning, everyone, And thank you for participating in Minerva's earnings conference call for the Q4 and for the year of 2020, this year, will be marked in history. The new coronavirus pandemic has turned the world slide down and imposed a new reality on all of us despite so many uncertainties and adversities Minerva Foods ends 2020 to strengthened and consolidates its leadership position in South America. Since the beginning of the pandemic, Minerva has tied with the most restrictive protocols for the treatment and protection of its employees, reinforcing safety and acting in the prevention and protection of our main and most important asset, our associates. In addition, we provide support to civil society with assistance, actions, donations and also financial support, actively contributing to the communities where we operate. So far, more than BRL43 1,000,000 have been invested in support actions across continent, including with the Institute of Butanter, one of the producers of the vaccine so expected and necessary for everyone. Social responsibility is part of our DNA, protecting people and ensuring food production were at the center of Minerva's efforts throughout 2020. Coping with the pandemic ended up generating greater complexity and volatility to markets directly affecting the beef industry. Our geographical diversification was essential in 2020, reducing risks and expanding opportunities, reinstating the importance of our unique exports platform from South America. I highlight the ability to arbitrate One of Minerva's main highlights over the past few years has been the discipline of our financial management. And in 2020, it was no different. In a year marked by fluctuations, Our risk management model was essential in protecting our balance sheet and our profitability. Speaking of profitability, the generation Shareholder value was one of Minerva's greatest achievements in 2020 with emphasis to our expressive distribution of dividends at a level above BRL500 million, representing almost 80% of the year's profit. Despite so many challenges, 2020 has also enabled great strides in consolidating our long term strategy in 2020. We evolved with initiatives aimed at innovation and the final consumer. The tumor. The development of advanced data analysis tools was one of them. Another was the e commerce platform and marketplace. And finally, the investment arm in start ups related to our supply chain. This is another initiative for Minerva to maximize opportunities and move forward in creating value for the business. We have also improved our corporate governance and management with the implementation and updating of various management tools and policies such as the integrity, anti corruption, destination of results, compensation and risk management policies in addition to the company's administration performance indication and assessment policy. In addition, we have made progress with our project to update and consolidate Minerva Sud's corporate culture, seeking to increasingly to integrate our values and business strategy. Transparency, equity, accountability and corporate responsibility our fundamental premises in Minerva's business model. Through these efforts, we add Minerva's commitment ship in the environmental agenda. I highlight our maturity in aspects such as the traceability of our suppliers. We are the 1st and only company in the sector to use monitoring systems in 100 percent of Brazilian territory and advanced debt positions Minerva Foods as leader in the fight against illegal deforestation. Also during this conference call, our Sustainability Director We'll present a little more about the initiatives and achievements in 2020 in addition to our new ESG projects. For the next few years, we are working to further improve the company's business model with an increasingly balanced business strategy and management in line with our corporate values. The opportunities are enormous in the global beef market, which continues to be marked by restricted supply, In terms of exports, we continue with the opening of new markets. Yesterday, for example, we had the opening of the Mexican market for Argentine meat. And these raises our commercial frontiers and makes the penetration of South American products to be increasingly more relevant. Moreover, I highlight the opportunities in niche products where the degree of customization that we can have in South America puts us in a unique situation in any market in the world. I want to stress that in the so called high growth markets such as Asia and Middle East and in particular the Chinese market, The fundamentals of demand for beef remained quite solid and the appetite for the product continues to grow year after year providing excellent prospects for exporters. In the field of financial management, we continue to work towards a more efficient, less costly and less risky capital structure, always maintaining our commitment to healthy leverage and solid balance sheet. We will maintain our focus on generating free cash and creating shareholder value, 2 essential drivers in the way we run our business and the main guidelines of this administration. And as it could not be otherwise, In 2021, we will remain committed to the sustainability agenda, a key path in our strategy and one of Minerva's main pillars and competitive advantages. Now let's move on to Slide 2 to start our presentation. We start with net income, which reached BRL114.1 million in the quarter, totaled BRL697.1 million in 2020, a result more than 40 times higher when compared to the previous year. The result of the year is another step in Minerva's strategy to generate shareholder value. The company comes quarter of the quarter delivering exactly what was promised to the market: financial discipline, profitability, free cash flow and creation of shareholder value. As a result of the good operational and financial performance of 2020, Minerva's management will propose to the shareholders meeting, the approval of complementary dividends, totally BRL394 1,000,000 or BRL0.73 dollars per share. Thus, considering the distribution of dividends anticipated in November of last year and Also the interest on our own capital generated this year, the total amount to be distributed to the Minerva Foods shareholder reaches BRL 542 1,000,000, significant R1.03 per share. Returning to our results, we're going talk about the free cash flow, one of our priorities. Cash generation was positive for the 12th consecutive quarter, totaling BRL32 1,000,000 in this period after the result of foreign exchange hedge accumulating BRL1.9 billion in the year, ratifying the company's operating and financial efficiency. Minerva's consolidated gross revenue was BRL6.1 billion in the Q4 2020 and DKK20.6 billion in the year. In this context, we highlight the performance of our exports, which accounted for approximately 67% of growth revenue in 2020 as a result of the strong international demand in Minerva Foods' great vocation in the export of beef. Speaking of profitability, Q4 2020, our EBITDA, even in the face of market challenges, totaled BRL617 million with an EBITDA margin of 10.8 percent in the year. Minerva's EBITDA reached a record level of BRL 2,100,000,000, a strong growth of 22% year over year with an EBITDA margin of 11%. Throughout the year 2020, one of Mineva's highlights was the strength of our balance sheet. We ended the year with the leverage measured by the net debt over EBITDA indicator 2.4x much lower compared to the multiple of 2019. Our cash position also remains comfortable at BRL6.4 billion at the end of the year, a level that ensures us a lot of tranquility facing any of the current challenges. Just as with the payment of dividends, the execution of our share buyback program is more One more good news for Minerva's shareholders. We acquired almost 20,000,000 shares of the company and are currently held in treasury. As I emphasized in the beginning of the presentation, 2020 is marked by enormous challenges imposed by COVID-nineteen, but also by the consistency and resilience of Minerva Foods in conducting its strategy with the reduction of the leverage level and mainly with the creation of value where our shareholders delivering 1 of the highest dividend yields in the Brazilian market in 2020. Finally, I'd like to highlight the recognition of our historic performance in the field of sustainability with Minerva being elected to be part of the portfolio of 2 main indices of the Brazilian market, EISE, the Corporate Sustainability Index and ICO2 Carbon Efficient Index, a great recognition of our practices, our commitment and our leadership in this agenda. We'll now move on to the next slide to comment on the operating performance, starting with the exports. In 2020, we consolidated our leadership as the largest beef exporter in South America, with approximately 18% of market share in the continent. This result reflects our geographical diversification in the region, which supported by our 16 international offices, provides Minerva with a great comparative advantage and a prominent position in the global exported beef. Let us now detail the performance of exports by region a little better. In the Brazilian division, Asia accounted for 53% of the export revenue and expressive growth of 14% points compared to the previous year. Asia was also the main destination of Athena Foods exports in the period accounting for 36% of the total exported by the division. You will see further that consolidated position between Minerva and Athena. There was a greater diversification of destinations for our exports. The performance of exports makes the region's growing demand for beef increasingly evident especially from China, but also from other important markets in Asia, such as Indonesia, Thailand, the Philippines, among others, a consistent movement that should be even more be more accentuated over the next few years. To conclude, I think it's important to highlight the fundamentals and market prospects that remain very solid. We have a combination of very positive factors for the coming periods with the demand for beef very heated in emerging markets, especially Southeast Asia. Where did this, the movement of return of the food service, which brings additional demand and not calculated in 2020. In addition, problems in the production of beef from Australia accentuate the imbalance in the world supply and opens up opportunity for South American producers. I highlight the impact of African swine fever on the global protein supply with new outbreaks being detected even today. Therefore, with great uncertainty For the availability of this product, in this view of promising horizon, Minerva's Strategy is to continue maximizing our competitive advantages, investing innovation, niche opportunities, risk management and Market Intelligence to attain our commercial and logistical solutions increasingly more profitable and Efficient, always respecting our commitment with ethics and sustainability. I'd now like to give the floor to Tasciano, who's going to talk a bit more about our achievements and initiatives in the field of sustainability. Thank you very much, Fernando. Good morning, everyone, and thank you for participating in our results conference call. Sustainability is consolidated as strategic pillar of Minerva Foods and becomes a value of the company. The year of 2020 was marked by significant material advances in the three pillars of sustainability even in the face of a new and challenging scenario posed by the pandemic. In dedication to the planet, our environmental pillar we led the fight against climate change, especially emissions resulting from conversion of land use. We did this without any future promises working with the best technology today to contribute to the sustainability of the value chain. We are the 1st company in the industry to geographically monitor 100% of purchases throughout the national territory. 3. There are more than 9,000,000 hectares monitored in the Amazon and more than 2,000,000 hectares monitored in the Savannah, Pantanal and Atlantic Forest. The Amazon region represents 35% of the volume of purchases, while the other regions accounts for 65% of the total produced. A material breakthrough against illegal deforestation, respect for indigenous land and environmental protection areas, which positions Benebafoods as a leader in verifying the supply chain. Our pioneering spirit also met the challenge of evaluating indirect supplier farms. We are the 1st company to address the issue through the VisiPACK 2 In the first test published in the Q3 2020 earnings release, the indirect forms mapped and verified by the 2 were 99.9% in compliance with the criteria defined by the indirect suppliers working group. In the 2nd calibration test of the VisiPag II, the result was 99.3% of compliance, reaching a total in both tests of 3,689 indirect funds verified for 2,000 317 direct supplier funds, a proportion of 1.6 indirect suppliers for each direct supplier of the company, proportion that reinforce the supply chain of Manueva Foods, more technologized producers producing with High Quality and Accessing International Markets. In Paraguay, we expanded the geographic monitoring of suppliers beyond the border of the Chaco region, and we started monitoring the whole territory of the country. More than 1200 farms are registered in the monitoring system, accounting for 75% of the total animals monitored for illegal deforestation overlapping with indigenous land and environmental protection areas in an area of over 3,000,000 hectares. We joined the B3 Corporate Sustainability Index and also the Carbon Efficient Index, reflecting Manavo Foods Practices in Transparency and Sustainability. In addition, we remain with the best results in the audit of the Federal General Attorney's Office against illegal deforestation in the Amazon, a process that best reflects the real commitment of the company, the data are public and can be accessed on our website and also in the presentation of this webcast. In the Prosperity of Our People pillar, we acted quickly to mitigate the effects of the new coronavirus pandemic. And in the Q1 of 2020, We started a contingency plan in all countries, redesigning processes, activities and routines in compliance with the WHO guidelines and local authorities. We guarantee the safety and well-being of our associates and third parties in the value chain, and we work together with the communities through the donation of over BRL43 1,000,000 in PPE, food, medical equipment and medicines, reiterating our commitment to protection of life for you, guarantee the best safety and health indicators for our workers for more than 20000 workers worldwide, and we supported more than 12,000 producers across South America, taking their production to customers in more than other countries in product quality and respect for life, our pillar on food safety and animal welfare. We maintained all operations in Brazil, Argentina, Paraguay and Uruguay certified by the British Retail Consortium Global Standard. Minerva Foods' animal welfare program goes beyond compliance with regional legislation and adopt the standards of the North American Meat Institute and the European Union Regulation 10 99 with an average attendance of or complies above 99% in international welfare certifications and investments in excess of BRL1 1,000,000. We work with transparency in the management of indicators, 0 tolerance to maltreatment and acts of neglect to animals, dollars 0 for prophylactic use of antibiotics and growth hormones in addition to a lot of training throughout the value chain reaching over 460 training courses in 2020. On the second slide, we present our 2021 plan with a guidance to advance in low carbon production. In partnership with Wey Carbon, we're going to make a plan to decarbonize our operations focused on the environmental efficiency of our plans and also the energy matrix of renewable sources. Our goal is to reduce our carbon footprint in Scopes 12, those directly related to our operations. In addition to preparing a water footprint study to address the issue, it is important to highlight that considering the value chain, the conversion of land use and production is the activity that concentrates the greatest risk related to climate change. Accordingly, by the end of the year, Minerva will monitor 100% of purchases across Paraguay's territory and start a geo monitoring system in Colombia. In Brazil, we will keep monitoring throughout the national territory for 100% of purchases and we'll integrate the VisiPec 2, to verify indirect suppliers, farmers in the Amazon until December. Aimed at supporting the production chain, we signed a partnership with Embraer to establish protocols that aim to assess the carbon balance and biodiversity of our partners in addition to contributing to production practices that improve the productivity and profitability of producers. We will advance with the same objective in all countries in which we operate, collaborating for the analysis of primary data, which reflect the sustainability practices of Minerva Foods' partner producers. We launched the QR code for our Stanson 92 and Minerva Angus line, bringing the consumer a new experience that goes beyond the quality and flavor and taste of our products. In Scanning the image, consumers have access to information on the origin of animals and protection system adopted data on quality certifications, access to the results of sustainability audits to the characteristics of the cuts. Our plan is to expand the project to more products and take the information to our international consumers customers as well. Human rights It's also an extremely relevant issue for Minerva and we are preparing a complete risk matrix in our entire operation in partnership with Instituto Terroir. Finally, we will continue to engage with the value chain sustainability in a material way focused on reducing our carbon footprint, reducing our water footprint and mainly fighting climate change. Minerva Foods' commitment is demonstrated with the material results today, now contributing to the sustainability of our planet. Now I give the floor to Edson, who's going to continue with the earnings results presentation. Thank you, Tatiano. We're going to start on Slide 7. Let's start talking about operating performance and the breakdown of the share of divisions of Minerva's gross revenue. Q4 Brazil division was responsible for 50% of the total gross revenue generated by company, While Athena Foods division accounted 40% and trading division 7% since the previous year, we have observed significant improvement in production of units in Brazil And the capacity has increased 6% point in the semester ending Q4 around 69%, a new level of the year. At Athena Foods, we run at at a stable capacity of approximately 77%, supported by the growing volume of exports. Thus, the use of Capacity of the company was 73% in the quarter. As we have indicated, this level of use is still slightly below our historical level of 80%, but it should be achieved over the next periods with the cooling of the reduction of pandemic. We highlight our consolidated exports by region, both for 4Q 2020. As Fernando mentioned, Asia continued to play a major role in Q4 region accounted for 49% of consolidated Exports and in the 12th month, the share of Asian continent totaled 44% of Minerva's exports in China, with a major world market representing 34% to conclude in the lower left corner, a result of our efficient operating execution and more balanced capital structure, our return on invested Capital continues to expand consistently, reaching 25% in 2020, the highest level of the last year's and positions us as a reference in the sector. Moving now to Slide 8. We'll start with the net revenue, which reached BRL5.7 billion in the Q4, a strong expansion of 17% compared to Q4 twenty nineteen. 2020 net revenue was record, totaling BRL 19 point BRL 4,000,000,000 an increase of over 13% compared to the previous year. Speaking of profitability and EBITDA, Q4 reached BRL617 million, an increase of 2% year over year, accounting an EBITDA Margin of 10.8 percent even in the face of a very challenging scenario of high cattle prices in Brazil, especially in the last month of the year. This scenario has been quite challenging, but the company has been very efficient in transferring this price increase, being able to maintain a good level of profitability. 2020, our EBITDA totaled around BRL2.1 billion at record level for Minerva and EBITDA margin of 11%, almost 1% point higher than 2019. Now let's move to Slide 9 to talk about Mineva's financial leverage. Our leverage ratio measured by the net debt to EBITDA indicator for the last 12 months dropped 2.4 times when compared to the end of 2019, even considering appreciation, almost 30% of the dollar gets real in 2020. Minerva's current level leverage that reflects management's committed to seeking a more efficient, less costly and less risky capital structure. It is worth mentioning that this is something that we have been communicating since the beginning of 2020 when we concluded our follow on in January 2020 and it has been carried out With great focus by this administration, I'd like to highlight that we still have BRL56 1,000,000 in warrants that should be exercised and reinforced our cash until the end of 2021. As soon as the Fiscal year occurs, these funds go into cash. And if we adjust the cash due to the effect of these funds, Minerva's net leverage after this end fiscal year ends up being reduced to 2.2. Moving on to the next slide, let's talk about net income and operating cash flow. 4Q was positive result quarter, obtaining BRL114 1,000,000 after calculation tax totaling BRL697 1,000,000 in 2020. This result reflects our strategy and our financial strategy over the years focusing total in free cash generation, risk control and reduction of indebtedness. These pillars have been priority for the companies and obviously have helped greatly in the results of 2020. Moving to generation operating cash generation. Q4 operating cash flow was negative CAD160 1,000,000 effect of the impact in working capital consumed DKK227 1,000,000 in Q4 seasonally happens in Q4, especially due to in this case of Q4 twenty it was negative variation, BRL495 1,000,000 in the line of other accounts payable. In the year, cash flow of activities totaled BRL3.2 billion. Now let's move to Slide 11 to comment on greatest priority of the company, which is free cash flow. Q4 cash flow continued positive for the 12th quarter, a total BRL 32,000,000. If we exclude the For exchange hedge and generation of free cash flow recurring, it was BRL83 1,000,000 in the quarter. Build up of the free cash flow, We start from an EBITDA before the nonrecurring items of CNY 610 1,000,000 CapEx, CNY 78 million with great part about BRL60 1,000,000 related to maintenance. Working capital was negative BRL227 1,000,000 And financial results based on cash was DKK228 1,000,000 negative. Excluding non recurrent effects of DKK6 1,000,000 due to Social charges we had with the pandemic, we get to free cash flow recurrent of BRL83 1,000,000 Q4. For 2020, total free cash flow totaled €1,900,000,000 EBITDA BRL 2,100,000,000 CapEx BRL 347 1,000,000 in the year. It's worth highlighting BRL 75 1,000,000 in the 3rd quarter related to the acquisition of the Vichagua plant in Colombia. Our maintenance CapEx was from 20.20 to 2 BRL50 1,000,000 a year. Financial result based cash was negative BRL242 1,000,000 a year. Variation working capital was positive BRL355 1,000,000. We had an impact of BRL40 1,000,000 in non recurring items. All of this, that said, did we get to free cash flow of BRL1.9 billion in 2020, which reflects an excellent performance financial performance of company in the year. I draw your attention to these results of free cash flow compared to the previous 12 months. We generated BRL1.9 billion of free cash flow for an EBITDA of BRL2.1 billion in other, where the conversion of bit and cash appeared to 90%. Our metrics of EBITDA exwaxia generation of free cash is quite adherent and this is quite unprecedented in this industry. Ultimately, 2020, 90% of the EBITDA generated was effectively converted to cash flow company. This amount has been invested in our improvement of our capital structure and distribution of value to our shareholders. Now let's move on to Slide 12 of our presentation and talk about the Net debt. Our total net debt totaled BRL4.7 billion. This 4th quarter. We had 2 impacts to the debt, BRL210 1,000,000 disbursed in our buyback program. We bought almost 20,000,000 shares, 2nd payment in November, BRL138 1,000,000 related to early dividend distribution and total impact BRL348 1,000,000 nonrecurring, increasing our net debt, but this money was directly to the hands of shareholders. Going to Bridge, We had a result that was positive in terms of free cash flow, BRL83 1,000,000 in the quarter, BRL52 1,000,000 that were negative with the effect of the cash of instruments or hedge related to our hedge policy and plus BRL410 1,000,000 effect non cash, merely accountable mark to market and our other hedge instruments. In addition, we also had a positive impact, noncash of foreign exchange variation in the part of the debt that is in foreign currency. Adding all these accounts and setting up bridge Minerva ended 20 20 with a net debt of BRL5.1 billion against BRL6 1,000,000,000 at the end of 2019. Even considering foreign exchange depreciation of approximately BRL110 in 2020, we were able to reduce the size of our net debt, adjusting net debt of Q4 by the impact of complementary dividends and share buyback with total BRL4.8 billion of debt that is practically stable regarding previous quarter. This position ratifies the commitment of this management and continues to reducing the level of indebtedness, especially improving our capital structure. We recently had recent updates from Fitch and S and P in our credit rating and this is constant search for strengthening our capital structure, reducing leverage, keeping our liquidity and especially considering in generation of free cash reducing the profile risk of the company naturally reflects a better outlook in the mid long term that ends up matching the assessment of risk agencies. Our currency hedge policy continues imposing that we have at least 50% protection for foreign exchange exposure that is passive and long term, this is maintained and this may be seen through our head instruments that we have been presenting in our financial statements. Well, having this foreign exchange exposure very well projected. We continue focusing our operating and financial and we keep on generating to our shareholders focused especially on the efficiency of our operations. On the next slide, we're going to talk a bit more about the capital structure. As we said, the net leverage level measured by net debt over EBITDA was in the 12 months was So the forecast at 2.4 percent adjusted by the impact of DKK348 1,000,000 relative to dividends anticipated. The buyback, It was stable $2,200,000,000 At the end of the year, we have a position of cash with $6,400,000,000 That gives us great confidence in modes of high volatility. Speaking of the profile of indebted, about 78% of our debt is exposed to foreign exchange flow, then we have a duration approximately 5 And lastly, I'd like to say that our commitment to our balance sheet and our hedge policy obliges us to project 50% long term. Now moving to Slide 14. As Fernando mentioned in the beginning of presentation, the cash generation or value generation for our shareholders is one of the great priorities of our event. In line with our excellent operating performance and financial results we've been attaining and consistent execution of the process of reducing leverage, The management of Minerva will propose the shareholders meeting in April payment of complementary dividends in the value of BRL384,000,000 dividends that are complementary of 0.73% per share actually, if we get or send if we take this manual and this additional distributions that were BRL138 1,000,000 or BRL0.26 per share plus interest on own capital paid now in January, net amount of BRL19 1,000,000 with total BRL 542 million in cash distributed to shareholders, which is about BRL 1.3 reais per share excluding obviously the shares in treasury. We're talking about dividend yield that is record of almost 11%, certainly a month's top 5 or top 10 in the share market or capital market in Brazil. This scenario was only possible due to the effort of Minerva's team in the past years. Our priority has always been clear: prioritize free cash flow, reduce our debt, our leverage and provide conditions so that Minerva can distribute value in a consistent relevant way to their shareholders. As we mentioned, from the beginning of 2020, finally, this moment has arrived and we are very happy to be able to announce this outlook of distribution of dividends to all the company's shareholders. You should remember that when we announced the policy of dividends in the early 2020, it said that the annual fiscal year, if the Net leverage EBITDA would be at level equal or lower, 2.5 percent, dividend minimum would 50%, 25% with compulsory dividend and 25% as complementary. In this year, we're going beyond the policy. As I said, BRL384,000,000 complementary dividends added to the previous distributors totals BRL 542 million. In other words, BRL1.3 per share distributing to shareholders mean almost 80% of all the net income of the year after the considerations of mandatory reserves. The proposal will be submitted to the General shareholders meeting in April. Once approved, the share should be negotiated ex from the next day with payment expected for February 28 to close, we should highlight that this scenario of distribution dividends and not compromise the strategy of Nevin keeping a proper level of leverage. If we consider everything by the end of 2021, the ratio net debt EBITDA with a 12 months based on Q4 is still stable 2.4 percent even with this amount that is quite significant distribution of value to shareholders. We continue, therefore, to have a comfortable balance sheet position with a solid and balanced capital structure, much less costly with a lower risk profile, which ultimately provides opportunities such as this to generate and distribute even more value to our shareholders. Well, with this, we conclude the earnings results presentation, and I'm going to give the floor to the operator to start our Q and A session. Ladies and gentlemen, we're going to start the Q and A session for analysts and investors. Before we start, we'd like to inform that the answers are going to be answered in Portuguese and in English only via webcast. 2. Our first question comes from Joao Suarez from Citibank. Please, Joao, you may proceed. Good morning, everyone. I have two questions. First, I'd like to hear from you the plans regarding The announcement that you made with Alik to related to Australia and SPAC. How do you imagine the profile of assets? And more or less, The timing that you see of that or granularity regarding the S and P would help us here. A I can point that to our attention. I see the use of capacity in Brazil that is relatively smaller than we saw last year, about 76%, last year almost 80%. And here you see the model running at 70%. I'd like to hear a bit from you. And this is more a market vision, Fernando, if you can help to understand what is availability? Is it something strategic? I see the volume of exports dropping 10% year after year. Is this a reflex of less use of capacity? If you could give us a bit of view on the use of capacity and volume, that would be great help. Thank you. Regarding the joint venture with Saliq, We have this idea of having geographical diversification and diversify what we have in Uruguay, Lampe, when we have strong penetration in the Middle East and the Southeast of Asia. You maximize our commercial structures that are located there. So they are investments that are relatively small And they actually replaced a market of live Animals that gradually reduces being replaced both by the economic part and sanitary part by the production in the source. So this is the rationale behind this JV. As to exports, We've had the internal market that was quite stronger than domestic market have Be surprised in the 4th quarter, you had we had significant growth that actually had several factors, the reduction of slaughter that create more power of pricing, especially domestically, so it has more inertia. So we see greater effects of exports for the 1st semester of 2020 2 Q1 of 2021 rather. And so We have weekly we make the weekly decision of where to allocate our portfolios and then due to foreign exchange, market and all that, the decision is made based on all of these things. It is a decision that is a result of the most efficient way of maximizing the return for the dismantling of capital. So this is what justifies that. So it should highlight that greater traction between the Latin American countries or South American countries had great effect. One of the features of Minerva is geographical distribution that allows that regardless of what happens in the market of beef, foreign exchange of being able to offset one source visavis the other, accelerating 1 and de accelerating the other whenever necessary. I understand. Fernando, a follow-up regarding when we look at exports markets, We see that some regions clearly now we see this here, the down the reduction of demand of foodservice. This I would assume that in the first quarter. You continue seeing these dynamics looking outside or abroad to accelerating these volumes of exports. How do you see things in the short term? Each country a different reality. Southeast Asia is resuming quite strongly, food market. You have Middle East as well. Some countries quite at ease and it's difficult for you to generalize. But no doubt, in January, the food is one of the industries that was most impacted, and we're going to have total recovery with vaccination plans that should occur, especially in developed country in the 2nd semester. So You have a potential of even greater increase of food, of the food market. Added to that, I think the scenario is valid for our analysts. We have the grain market. So what's happening, we have great brought pressure on soybean and corn and is actually increasing the price of competitive products, chicken, of poultry and swine, both in terms of cost and pressure of the nonresolved crisis of ASF. China tried vaccinations, but vaccines seem to present problems. There are still outbreaks of IASF. And so there is quite productive scenario for beef, not early in the world market, but also considering competitive proceeds. Our next question is from Isabella Simonato from Bank of America. Please, Isabella, you may proceed. Good morning, Fernando. Good morning. So congratulations on your results. I'd like you to comment a bit on how you see this beginning of year and the dynamics for over 2020. And knowing that we have a lot of uncertainties regarding coronavirus and if you could talk about cycle and pricing, What draws our attention is the price increase in the domestic market quarter by quarter? How do you see this in the beginning of this year? Thank you. Good morning, Isabella. Well, we believe that this year we're going to have behaviors that are going to be quite different. We see the Q1 domestic market, quite sustainable with the increase we had in the 4th Q. This reversion is not happening. I think it's very much due to the drop in slaughter, less availability of meat in the domestic market and the emergency The grant may continue over the year for some time. There is this expectation that should this emergency grant should continue. So the domestic market should be very much sustained. Exports, Usually, they gain more drive in February, March. So in January February, exports are weaker than last year. We have an expectation that, that should start reports are weaker than last year. We have an expectation that, that should start increasing as of March in terms of volume and the Improvement in volume will bring a price improvement. This should happen over the year. To be quite honest with you, we believe that first, second quarter this year should be a bit weaker and 3rd and 4th quarters much stronger, more or less on the levels we See, we saw last year, 1st, 2nd, 3rd and 4th, around what we saw last year, but very likely weaker than last year for some reasons. Exports first exports will take longer to react. 2nd point, Capital price is significantly higher than last year. So this is something that we've been talking about, the capital raising market as of 2020. So this has been happening. So this is not bad news in terms of price because Brazil has great capacity. We have grade capacity as exporters to transfer price. So there is some lag for this to happen. So this should impact results of 1st, 2nd quarter, but we believe that 3rd and 4th quarters, even at a cattle level, much higher than we've seen Last year, we can generate margins that we generated last year in the 2nd semester. Having said that, we have the rainfall in Brazil that have delayed to start. This ended up reducing and delaying the offer of capital, so that should come more strongly in April May, it should be delayed and should be more distributed from May to July because of the late rainfall. This reflects the cattle price to be higher. And on the other hand, we have a very well supported domestic market as we usually don't see this as a great positive surprise and we see exports accelerating strongly. Fernando talked a lot about China and it's worth highlighting the ASF greater outbreaks, more Outbreaks in ASF, it's happening in China and our commercial power there says that prices started growing strongly and very likely We should have price increase in dollar to exports for China over the Q2. This is the scenario we're working on. Perhaps the Q2, we have slightly weaker results, but there will be offset for sure in the 3rd Q4 of the year. Very clear. Thank you. Reminding you Our next question comes from Marcel Moraz from Santander. Please Marcel, you may proceed. Good morning, Fernando. Good morning, Edson. Congratulations on your figures. I'd like to go back to this cattle availability question. You talked about Brazil. But at Athena, there was an expansion, right, in the half load slaughter was the first positive number since the Q3 2019. Is this related to some improvement in the availability in these countries or is it linked to the fact that you well, you deaccelerated Brazil a bit and decided to pull a bit the other countries to meet foreign market demand? What is the environment of availability of cattle in the other countries? Thank you. We have different realities in different places. So if you follow cattle price. Uruguay had a drop, showing more availability, Paraguay, too, with greater availability, and we should highlight that we made an investment in Colombia. We've increased our capacity installed capacity to produce in Colombia that has a different seasonality than Brazil. So this shows the capacity of our ability of arbitration, non vis a vis Minerva Brasilia. They are Individual countries that we accelerate or decelerate. Great part of the work done has been a checklist within Minerva, the whole procedure that allows us to speed up or slow down the plants very quickly at lowest cost possible. And it's not just the used capacity. It's a speed at which you can add capacity or remove capacity at a market that we see that is increasingly volatile. Adding to what Edino said for Isabella's question, We see in the commodities market, beef, we see much greater volatility. So the speed, The structure of diversification, geographical diversification that allows us to arbitrate markets And source and destination, they are fundamental for us to live in a more volatile market. Just to reinforce the volatile market question. You have regulated inventory by customer that reinforces the volatility. Date. So we're preparing Minerva for the scenario. One of the features is risk management. So we're preparing ourselves for a more volatile scenario in 2021. Perfect. I understand that Colombia may have has certainly contributed to this increase in slaughter. But do you think it's too soon for us to assume that the Athena slaughter will be in the positive field for 2021? No doubt. Right. And Argentina, if you could comment on it as well, what's about the availability there? Argentina, you have a situation of reduction At this time, in the Q1, we have a slowdown in slaughter. We have a value reserve for foreign exchange protection, but since the government is speeding up the evaluation, so you part gradually having a normalization and situation in Argentina is quite special due to the interference of the government. We also see Argentina going back to taking up greater space on the international scene, especially because Argentina is the natural substitute of Australia that is at the lowest slaughter in the past 30 years. Thank you. Perfect. Thank you, Fernando. I'd like to give the floor now to the speakers to answer The questions from the webcast. Well, we have 3 questions from the webcast. The first from Antonio Carlos regarding the volume of exports used of installed capacity some signed early this year to return to the levels of 2019. When do you intend to leave these levels? As we've mentioned during the presentation, quarter by quarter, we are gradually increasing our use of capacity. The idea is that company as a whole reaches 80% close that was the pre COVID-nineteen capacity use. We saw the drop from 80 to 71 and it's been gradually growing. And now Today is 73, 74,000,000 and over the year, we expect to get to this level. It will all depend on how The pandemic will evolve and all the measures we have to take of distancing within the plants. So it is an evolution, on track and it should happen at the end of the year. Another question from Philippe Frode. I'd like to know if there is expectation of new share buyback program. The decision is actually by the Board of Directors. We make the suggestion. And obviously, due to the cash amount that is generated by the company and the price that we see of shares today very depreciated, it makes sense the Board allowed the new program of share buyback. Ricardo Carneiro, Considering the great importance of China and exports, what's the base scenario of meat demand in the Chinese market is, what I'd answer Isabella, we have quite optimistic scenario. Expo should resume more strongly as of March. The ASF outbreak drive even more our demand and all the secular movement of increase of middle class migration of consumption habits that makes the consumption of protein to beef to continue over the years in China and this should continue to happen in 2021. So our base scenario is quite positive increase in demand volumes and especially price increase over the year. And the last question that came up here from Jose Pedro for Athena Foods. You have this outlook. No, we've mentioned it At various times, we do not have any other intent of having the IPO of Athena in the short, mid term. This has Being discarded, that was one of the ways of speeding up the deleverage of our balance sheet and also block Valuable with the results we've attained, we do have no need whatsoever in terms of capital structure of doing that. We're only going to think about Athena Food Operations, if it is something that is really worthwhile from the standpoint of generating value to our shareholders. And the last question. Roger, I'd like to know if you believe that it is possible to maintain a current way, the Net debt, EBITDA, cash flow for forthcoming year. 90% is actually an extremely high level. But if you look historically and you do the math with our capital structure today with much more button stamped and maintenance CapEx well controlled and metrics of working capital, which are benchmark in the industry. I'd say that we can get the conversion EBITDA cash over 60% in this range of 60%, 90%. Since there are no more questions, We would now conclude the question and answer session. At this time, I would like to give the floor back to Mr. Fernando Queroz for his final remarks. Please, Fernando? Thank you. I'd like to reinstate my great thanks to The Minerva team, if we look at what was the end of last year and what was the end of 2020, 2019 vis a vis 2020, we've transformed Minerva, we've changed company at an extremely different scenario, which was during the pandemic. It allowed us to be more united, to be more in line and aligned and be able to deliver the results you can see. So I would really like to give special highlight and acknowledgment to whole team, dedication, drive and resilience, which have been fundamental over 2020. Thank you all the team to all of you. To 2021, I would like to Highlight that commitment of Minerva for value generation to shareholders, it will continue. It won't be a simple year. We are facing unknown territory. So we have a country at different stages of vaccination, of development and economic impact. So we will have a lot of volatility, which We have learned within Minerva to turn volatility into value. So we are prepared for that, especially supported by this team that is so dedicated and so prepared and state here our commitment of generating value to shareholders. I thank you all for your interest in Minerva. We remain at your disposal to clarify doubt and questions and to be closer to you with transparency, with clarity as to how we conduct our businesses. And Finally, I highlight all the work of culture that we're carrying out, all the work of alignment towards this new reality making Minerva increasingly more innovative, modern, always ahead of what happens to markets. Thank you very much. Minerva's webcast is completed. We thank you all for your participation And we wish you a good day. You may now disconnect.